“j2 continues to demonstrate its power as a vertically-driven, Internet
information and services company,” said Vivek Shah, CEO of j2 Global.
“We have an expanding portfolio of some of the best ad- and
subscription-supported brands on the Internet. We remain committed to
the strategy and operating model that produced record results last year
and should help us achieve our goals in 2018.”

FOURTH QUARTER 2017 RESULTS

Q4 2017quarterly revenues increased 25.7% to a Q4 record of
$316.4 million compared to $251.8 million for Q4 2016.

Net cash provided by operating activities decreased 4.9% to $85.4
million compared to $89.8 millionfor Q4 2016.Q4 2017
free cash flow(1) decreased 8.9% to $75.3 million compared to
$82.7 million for Q4 2016. The decline in free cash flow(1)
is due to a greater percentage of the revenues and EBITDA coming from
the media business which has a longer collection cycle resulting in less
cash inflows associated with accounts receivable of approximately $19.0
million in comparison to Q4 2016.

GAAP net income increased 15.5% to $49.9 million in Q4 2017 compared to
$43.2 million for Q4 2016.

Quarterly Adjusted EBITDA(4) increased 21.8% to $141.9
million in the quarter compared to $116.5 million for Q4 2016.

j2 ended the quarter with approximately $408.7 million in cash and
investments after deploying approximately $149.4 million during the
quarter for acquisitions and the payment of j2’s regular quarterly
dividends.

Key financial results for Q4 2017 versus Q4 2016 are set forth in the
following table (in millions, except per share amounts). Reconciliations
of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and
free cash flow to their nearest comparable GAAP financial measures are
attached to this Press Release.

Q4 2017

Q4 2016

% Change

Revenues

Cloud Services

$146.9 million

$143.0 million

2.7%

Digital Media

$169.5 million

$108.8 million

55.8%

Total Revenue:

$316.4 million

$251.8 million

25.7%

Operating Income

$76.2 million

$68.2 million

11.7%

Net Cash Provided by Operating Activities

$85.4 million

$89.8 million

(4.9)%

Free Cash Flow (1)

$75.3 million

$82.7 million

(8.9)%

GAAP Earnings per Diluted Share (2)

$1.02

$0.89

14.6%

Adjusted Non-GAAP Earnings per Diluted Share (2) (3)

$1.79

$1.49

20.1%

GAAP Net Income

$49.9 million

$43.2 million

15.5%

Adjusted Non-GAAP Net Income

$87.3 million

$72.2 million

20.9%

Adjusted EBITDA (4)

$141.9 million

$116.5 million

21.8%

Adjusted EBITDA Margin (4)

44.8%

46.3%

(1.5)%

FULL YEAR 2017 RESULTS

2017 revenues increased 27.9% to a record of $1,117.8 million in 2017
compared to $874.3 million for 2016.

Net cash provided by operating activities decreased 6.4% to $264.4
million in 2017 compared to $282.4 millionfor 2016.2017
free cash flow(1) decreased 1.2% to $264.8 million compared
to $267.9 million for 2016. The decline in free cash flow(1)
is due to additional cash outflows associated with income taxes of
approximately $28.0 million and a greater percentage of the revenues and
EBITDA coming from the media business which has a longer collection
cycle resulting in less cash inflows associated with accounts receivable
of approximately $7.0 million in comparison to 2016.

GAAP earnings per diluted share(5) decreased 9.6% to $2.83 in
2017 compared to $3.13 for 2016. The decrease over the prior comparable
period is primarily attributed to the increase in interest expense
associated with the issuance of the $650 million 6.0% Senior Notes due
in 2025, the loss on extinguishment of the $250 million 8.0% Senior
Notes and the increased amortization expense associated with
acquisitions, most notably Everyday Health. Adjusted non-GAAP earnings
per diluted share(5)(6) for the year increased 13.0% to $5.64
compared to $4.99 for 2016.

GAAP net income decreased by 8.5% to $139.4 million in 2017 compared to
$152.4 million for 2016. The decrease over the prior comparable period
is primarily attributed to the increase in interest expense associated
with the issuance of the $650 million 6.0% Senior Notes due in 2025, the
loss on extinguishment of the $250 million 8.0% Senior Notes and the
increased amortization expense associated with acquisitions, most
notably Everyday Health.

Annual Adjusted EBITDA(4) increased 16.9% to $463.0 million
in 2017 compared to $396.1 million for 2016.

j2 ended the year with approximately $408.7 million in cash and
investments after deploying approximately $256.1 million during the year
for acquisitions and the payment of j2’s regular quarterly dividends.

Key financial results for 2017 versus 2016 are set forth in the
following table (in millions, except per share amounts). Reconciliations
of Adjusted non-GAAP earnings per diluted share, Adjusted EBITDA and
free cash flow to their nearest comparable GAAP financial measures are
attached to this Press Release.

2017

2016

% Change

Revenues

Cloud Services

$578.9 million

$567.0 million

2.1%

Digital Media

$538.9 million

$307.3 million

75.4%

Total Revenue:

$1,117.8 million

$874.3 million

27.9%

Operating Income

$245.7 million

$242.6 million

1.3%

Net Cash Provided by Operating Activities

$264.4 million

$282.4 million

(6.4)%

Free Cash Flow (1)

$264.8 million

$267.9 million

(1.2)%

GAAP Earnings per Diluted Share (5)

$2.83

$3.13

(9.6)%

Adjusted Non-GAAP Earnings per Diluted Share (5) (6)

$5.64

$4.99

13.0%

GAAP Net Income

$139.4 million

$152.4 million

(8.5)%

Adjusted Non-GAAP Net Income

$275.1 million

$243.9 million

12.8%

Adjusted EBITDA (4)

$463.0 million

$396.1 million

16.9%

Adjusted EBITDA Margin (4)

41.4%

45.3%

(3.9)%

BUSINESS OUTLOOK

For fiscal 2018, the Company estimates that it will achieve revenues
between $1.20 billion and $1.25 billion, Adjusted EBITDA between $480
million and $505 million and Adjusted non-GAAP earnings per diluted
share of between $5.95 and $6.25.

Adjusted non-GAAP earnings per diluted share for 2018 excludes
share-based compensation of between $31 million and $34 million,
amortization of acquired intangibles and the impact of any currently
unanticipated items, in each case net of tax.

It is anticipated that the non-GAAP effective tax rate for 2018
(exclusive of the release of reserves for uncertain tax positions) will
be between 23.0% and 25.0%.

The Company has not reconciled the Adjusted non-GAAP earnings per
diluted share and tax rate guidance included in this release to the most
directly comparable GAAP measure because this cannot be done without
unreasonable effort due to the variability with respect to costs related
to acquisitions and taxation, which are potential adjustments to future
earnings. We expect the variability of these items to have a potentially
unpredictable and significant impact on our future GAAP financial
results.

DIVIDEND

j2’s Board of Directors approved a quarterly cash dividend of $0.405 per
common share, a $0.01, or 2.5% increase versus last quarter’s
dividend. This is j2’s twenty-sixth consecutive quarterly dividend
increase since its first quarterly dividend in September 2011. The
dividend will be paid on March 9, 2018 to all shareholders of record as
of the close of business on February 22, 2018. Future dividends will be
subject to Board approval.

EXTENSION OF SHARE REPURCHASE PROGRAM

The Company has extended its one-year five million share repurchase
program set to expire February 19, 2018 by an additional year.
Approximately 1.9 million shares remain available for purchase under the
program.

Notes:

(1)

Free cash flow is defined as net cash provided by operating
activities, less purchases of property, plant and equipment, plus
excess tax benefit from share-based compensation. Free cash flow
amounts are not meant as a substitute for GAAP, but are solely for
informational purposes.

(2)

The estimated GAAP effective tax rates were approximately 39.6% for
Q4 2017 and 25.8% for Q4 2016. The estimated Adjusted non-GAAP
effective tax rates were approximately 27.1% for Q4 2017 and 29.0%
for Q4 2016.

(3)

Adjusted non-GAAP earnings per diluted share excludes certain
non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted
non-GAAP Financial Measures, for the three months ended December 31,
2017 and 2016 totaled $0.77 and $0.61 per diluted share,
respectively.

(4)

Adjusted EBITDA is defined as earnings before interest and other
expense, net; income tax expense; depreciation and amortization; and
the items used to reconcile EPS to Adjusted non-GAAP EPS referred to
in Note (3) above. Adjusted EBITDA amounts are not meant as a
substitute for GAAP, but are solely for informational purposes.

(5)

The estimated GAAP effective tax rates were approximately 30.3% for
2017 and 27.9% for 2016. The estimated Adjusted non-GAAP effective
tax rates were approximately 27.9% for 2017 and 28.8% for 2016.

(6)

Adjusted non-GAAP earnings per diluted share excludes certain
non-GAAP items, as defined in the Reconciliation of GAAP to Adjusted
non-GAAP Financial Measures, for the twelve months ended December
31, 2017 and 2016 totaled $2.81 and $1.92 per diluted share,
respectively.

“Safe Harbor” Statement Under the Private Securities Litigation
Reform Act of 1995: Certain statements in this Press Release are
“forward-looking statements” within the meaning of The Private
Securities Litigation Reform Act of 1995, including those contained in
Vivek Shah’s quote and the “Business Outlook” portion regarding the
Company’s expected fiscal 2018 financial performance. These
forward-looking statements are based on management’s current
expectations or beliefs and are subject to numerous assumptions, risks
and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. These factors
and uncertainties include, among other items: the Company’s ability to
grow non-fax revenues, profitability and cash flows; the Company’s
ability to identify, close and successfully transition acquisitions;
subscriber growth and retention; variability of the Company’s revenue
based on changing conditions in particular industries and the economy
generally; protection of the Company’s proprietary technology or
infringement by the Company of intellectual property of others; the risk
of adverse changes in the U.S. or international regulatory environments,
including but not limited to the imposition or increase of taxes or
regulatory-related fees; and the numerous other factors set forth in j2
Global’s filings with the Securities and Exchange Commission (“SEC”).
For a more detailed description of the risk factors and uncertainties
affecting j2 Global, refer to the 2016 Annual Report on Form 10-K filed
by j2 Global on March 1, 2017, and the other reports filed by j2 Global
from time-to-time with the SEC, each of which is available at www.sec.gov.
The forward-looking statements provided in this press release, including
those contained in Vivek Shah’s quote and in the “Business Outlook”
portion regarding the Company’s expected fiscal 2018 financial
performance are based on limited information available to the Company at
this time, which is subject to change. Although management’s
expectations may change after the date of this press release, the
Company undertakes no obligation to revise or update these statements.

About non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared
and presented in accordance with generally accepted accounting
principles (“GAAP”), we use the following Adjusted non-GAAP financial
measures: Adjusted non-GAAP net income, Adjusted non-GAAP earnings per
diluted share, Adjusted EBITDA and free cash flow. The presentation of
this financial information is not intended to be considered in isolation
or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP.

We use these Adjusted non-GAAP financial measures for financial and
operational decision-making and as a means to evaluate period-to-period
comparisons. Our management believes that these Adjusted non-GAAP
financial measures provide meaningful supplemental information regarding
our performance and liquidity by excluding certain expenses and
expenditures that may not be indicative of our recurring core business
operating results. We believe that both management and investors benefit
from referring to these Adjusted non-GAAP financial measures in
assessing our performance and when planning, forecasting, and analyzing
future periods. These Adjusted non-GAAP financial measures also
facilitate management’s internal comparisons to our historical
performance and liquidity. We believe these Adjusted non-GAAP financial
measures are useful to investors both because (1) they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision-making and (2) they are used by our
institutional investors and the analyst community to help them analyze
the health of our business.

For more information on these Adjusted non-GAAP financial measures,
please see the appropriate GAAP to Adjusted non-GAAP reconciliation
tables included within the attached Exhibit to this release.

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

December 31, 2017

December 31, 2016

ASSETS

Cash and cash equivalents

$

350,945

$

123,950

Accounts receivable, net of allowances of $8,701 and $7,988,
respectively

Non-GAAP net income is GAAP net income with the following modifications,
net of tax: (1) elimination of share-based compensation and the
associated payroll tax expense; (2) elimination of certain
acquisition-related integration costs; (3) elimination of interest costs
in excess of the coupon rate associated with the convertible notes; (4)
elimination of amortization of patents and intangible assets that we
acquired; (5) elimination of additional tax or indirect tax related
expense/benefit from prior years; (6) elimination of gain on sale of
investments; (7) elimination of gain on sale of businesses; (8)
elimination of additional tax expense due to the Tax Cuts and Jobs Act;
and (9) elimination of dilutive effect of the convertible debt.

Three Months Ended December 31,

2017

Per Diluted Share *

2016

Per Diluted Share *

Net income

$

49,871

$

1.02

$

43,158

$

0.89

Plus:

Share based compensation (1)

8,056

0.17

1,366

0.03

Acquisition related integration costs (2)

8,205

0.17

8,788

0.18

Interest costs (3)

1,807

0.04

(850

)

(0.02

)

Amortization (4)

21,077

0.44

21,316

0.45

Tax expense (benefit) from prior years (5)

2,475

0.05

(1,574

)

(0.03

)

Sale of businesses (7)

(15,685

)

(0.33

)

—

—

Tax Cuts and Jobs Act (8)

11,539

0.24

—

—

Convertible debt dilution (9)

—

0.01

—

0.01

Adjusted non-GAAP net income

$

87,345

$

1.79

$

72,204

$

1.49

Twelve Months Ended December 31,

2017

Per Diluted Share *

2016

Per Diluted Share *

Net income

$

139,425

$

2.83

$

152,439

$

3.13

Plus:

Share based compensation (1)

17,297

0.36

8,598

0.18

Acquisition related integration costs (2)

20,669

0.43

12,564

0.26

Interest costs (3)

13,704

0.29

3,467

0.07

Amortization (4)

86,969

1.82

73,022

1.53

Tax expense (benefit) from prior years (5)

4,349

0.09

(1,520

)

(0.03

)

Sale of investments (6)

—

—

(4,675

)

(0.10

)

Sale of businesses (7)

(18,839

)

(0.39

)

—

—

Tax Cuts and Jobs Act (8)

11,539

0.24

—

—

Convertible debt dilution (9)

—

0.05

—

0.01

Adjusted non-GAAP net income

$

275,113

$

5.64

$

243,895

$

4.99

* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated independently.

Non-GAAP net income is GAAP net income with the following modifications:
(1) elimination of share-based compensation and the associated payroll
tax expense; (2) elimination of certain acquisition-related integration
costs; (3) elimination of interest costs in excess of the coupon rate
associated with the convertible notes; (4) elimination of amortization
of patents and intangible assets that we acquired; (5) elimination of
additional tax or indirect tax related expense/benefit from prior years;
(6) elimination of gain on sale of investments; (7) elimination of gain
on sale of businesses; (8) elimination of additional tax expense due to
the Tax Cuts and Jobs Act; and (9) elimination of dilutive effect of the
convertible debt.

Three Months Ended December 31,

2017

2016

Cost of revenues

$

45,974

$

40,229

Plus:

Share based compensation (1)

(143

)

(123

)

Amortization (4)

(568

)

(1,490

)

Adjusted non-GAAP cost of revenues

$

45,263

$

38,616

Sales and marketing

$

92,525

$

63,717

Plus:

Share based compensation (1)

(458

)

(393

)

Acquisition related integration costs (2)

(4,471

)

(4,327

)

Adjusted non-GAAP sales and marketing

$

87,596

$

58,997

Research, development and engineering

$

10,267

$

10,881

Plus:

Share based compensation (1)

(367

)

(240

)

Acquisition related integration costs (2)

(35

)

(947

)

Adjusted non-GAAP research, development and engineering

$

9,865

$

9,694

General and administrative

$

91,398

$

68,849

Plus:

Share based compensation (1)

(8,029

)

(2,947

)

Acquisition related integration costs (2)

(6,747

)

(7,699

)

Amortization (4)

(34,706

)

(25,906

)

Tax (expense) benefit from prior years (5)

(1,970

)

1,900

Adjusted non-GAAP general and administrative

$

39,946

$

34,197

Interest expense, net

$

16,372

$

10,400

Plus:

Acquisition related integration costs (2)

(90

)

(8

)

Interest costs (3)

(1,897

)

(1,448

)

Tax (expense) benefit from prior years (5)

(830

)

171

Adjusted non-GAAP interest expense, net

$

13,555

$

9,115

Other income, net

$

(22,696

)

$

(438

)

Plus:

Sale of businesses (7)

22,981

—

Adjusted non-GAAP other expense (income), net

$

285

$

(438

)

Income Tax Provision

$

32,669

$

15,041

Plus:

Share based compensation (1)

941

2,337

Acquisition related integration costs (2)

3,138

4,193

Interest costs (3)

90

2,298

Amortization (4)

14,197

6,080

Tax expense (benefit) from prior years (5)

325

(497

)

Sale of businesses (7)

(7,296

)

—

Tax Cuts and Jobs Act (8)

(11,539

)

—

Adjusted non-GAAP income tax provision

$

32,525

$

29,452

Total adjustments

$

(37,474

)

$

(29,046

)

GAAP earnings per diluted share

$

1.02

$

0.89

Adjustments *

$

0.77

$

0.61

Adjusted non-GAAP earnings per diluted share

$

1.79

$

1.49

* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated independently.

The Company discloses Adjusted non-GAAP Earnings Per Share (“EPS”) as a
supplemental Non-GAAP financial performance measure, as it believes it
is a useful metric by which to compare the performance of its business
from period to period. The Company also understands that this Adjusted
non-GAAP measure is broadly used by analysts, rating agencies and
investors in assessing the Company’s performance. Accordingly, the
Company believes that the presentation of this Adjusted non-GAAP
financial measure provides useful information to investors.

Adjusted non-GAAP EPS is not in accordance with, or an alternative to,
net income per share and may be different from Non-GAAP measures with
similar or even identical names used by other companies. In addition,
this Adjusted non-GAAP measure is not based on any comprehensive set of
accounting rules or principles. This Adjusted non-GAAP measure has
limitations in that it does not reflect all of the amounts associated
with the Company’s results of operations determined in accordance with
GAAP.

Non-GAAP net income is GAAP net income with the following modifications:
(1) elimination of share-based compensation and the associated payroll
tax expense; (2) elimination of certain acquisition-related integration
costs; (3) elimination of interest costs in excess of the coupon rate
associated with the convertible notes; (4) elimination of amortization
of patents and intangible assets that we acquired; (5) elimination of
additional tax or indirect tax related expense/benefit from prior years;
(6) elimination of gain on sale of investments; (7) elimination of gain
on sale of businesses; (8) elimination of additional tax expense due to
the Tax Cuts and Jobs Act; and (9) elimination of dilutive effect of the
convertible debt.

Twelve Months Ended December 31,

2017

2016

Cost of revenues

$

172,313

$

147,100

Plus:

Share based compensation (1)

(500

)

(436

)

Acquisition related integration costs (2)

(195

)

—

Amortization (4)

(2,916

)

(5,380

)

Adjusted non-GAAP cost of revenues

$

168,702

$

141,284

Sales and marketing

$

330,296

$

206,871

Plus:

Share based compensation (1)

(1,723

)

(1,782

)

Acquisition related integration costs (2)

(8,155

)

(5,859

)

Adjusted non-GAAP sales and marketing

$

320,418

$

199,230

Research, development and engineering

$

46,004

$

38,046

Plus:

Share based compensation (1)

(1,182

)

(904

)

Acquisition related integration costs (2)

(1,885

)

(997

)

Adjusted non-GAAP research, development and engineering

$

42,937

$

36,145

General and administrative

$

323,517

$

239,672

Plus:

Share based compensation (1)

(19,332

)

(10,528

)

Acquisition related integration costs (2)

(17,254

)

(11,926

)

Amortization (4)

(128,800

)

(95,561

)

Tax (expense) benefit from prior years (5)

(4,977

)

1,000

Adjusted non-GAAP general and administrative

$

153,154

$

122,657

Interest expense, net

$

67,777

$

41,370

Plus:

Acquisition related integration costs (2)

(90

)

(8

)

Interest costs (3)

(18,541

)

(7,186

)

Tax (expense) benefit from prior years (5)

(830

)

171

Adjusted non-GAAP interest expense, net

$

48,316

$

34,347

Other income, net

$

(22,035

)

$

(10,243

)

Plus:

Acquisition related integration costs (2)

(2,938

)

—

Tax benefit from prior years (5)

—

811

Sale of investment (6)

—

7,540

Sale of businesses (7)

27,696

—

Adjusted non-GAAP other expense (income), net

$

2,723

$

(1,892

)

Continued from previous page

Income tax provision

$

60,541

$

59,000

Plus:

Share based compensation (1)

5,440

5,052

Acquisition related integration costs (2)

9,848

6,226

Interest costs (3)

4,837

3,719

Amortization (4)

44,747

27,919

Tax expense (benefit) from prior years (5)

1,458

(462

)

Sale of investment (6)

—

(2,865

)

Sale of businesses (7)

(8,857

)

—

Tax Cuts and Jobs Act (8)

(11,539

)

—

Adjusted non-GAAP income tax provision

$

106,475

$

98,589

Total adjustments

$

(135,688

)

$

(91,456

)

GAAP earnings per diluted share

$

2.83

$

3.13

Adjustments *

$

2.81

$

1.92

Adjusted non-GAAP earnings per diluted share

$

5.64

$

4.99

* The reconciliation of net income per share from GAAP to
Adjusted non-GAAP may not foot since each is calculated independently.

The Company discloses Adjusted non-GAAP Earnings Per Share (“EPS”) as a
supplemental Non-GAAP financial performance measure, as it believes it
is a useful metric by which to compare the performance of its business
from period to period. The Company also understands that this Adjusted
non-GAAP measure is broadly used by analysts, rating agencies and
investors in assessing the Company’s performance. Accordingly, the
Company believes that the presentation of this Adjusted non-GAAP
financial measure provides useful information to investors.

Adjusted non-GAAP EPS is not in accordance with, or an alternative to,
net income per share and may be different from Non-GAAP measures with
similar or even identical names used by other companies. In addition,
this Adjusted non-GAAP measure is not based on any comprehensive set of
accounting rules or principles. This Adjusted non-GAAP measure has
limitations in that it does not reflect all of the amounts associated
with the Company’s results of operations determined in accordance with
GAAP.

Non-GAAP Financial Measures

To supplement its condensed consolidated financial statements, which are
prepared and presented in accordance with US GAAP, the Company uses the
following Non-GAAP financial measures: Adjusted EBITDA, Adjusted
non-GAAP net income, and Adjusted non-GAAP diluted EPS (collectively the
“Non-GAAP financial measures”). The presentation of this financial
information is not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with U.S. GAAP. The Company uses these Non-GAAP
financial measures for financial and operational decision making and as
a means to evaluate period-to-period comparisons. The Company believes
that they provide useful information about core operating results,
enhance the overall understanding of past financial performance and
future prospects, and allow for greater transparency with respect to key
metrics used by management in its financial and operational decision
making.

(1) Share Based Compensation. The Company excludes stock-based
compensation because it is non-cash in nature and because the Company
believes that the Non-GAAP financial measures excluding this item
provide meaningful supplemental information regarding operational
performance. The Company further believes this measure is useful to
investors in that it allows for greater transparency to certain line
items in its financial statements. In addition, excluding this item from
the Non-GAAP measures facilitates comparisons to historical operating
results and comparisons to peers, many of which similarly exclude this
item.

(2) Acquisition Related Integration Costs. The Company excludes
certain acquisition and related integration costs such as severance,
lease terminations, retention bonuses and other acquisition-specific
items. The Company believes that the Non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding operational performance. In addition, excluding this item from
the Non-GAAP measures facilitates comparisons to historical operating
results and comparisons to peers, many of which similarly exclude this
item.

(3) Interest Costs. In June 2014, the Company issued $402.5
million aggregate principal amount of 3.25% convertible senior notes. In
accordance with GAAP, the Company separately accounts for the value of
the liability and equity features of its outstanding convertible senior
notes in a manner that reflects the Company’s non-convertible debt
borrowing rate. The value of the conversion feature, reflected as a debt
discount, is amortized to interest expense over time. Accordingly, the
Company recognizes imputed interest expense on its convertible senior
notes of approximately 5.8% in its income statement. The Company
excludes the difference between the imputed interest expense and the
coupon interest expense of 3.25% because it is non-cash in nature and
because the Company believes that the Non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding core operational performance. In addition, the Company has
excluded 3 days of overlapping interest expense in June and the month of
July in connection with the 8.0% senior unsecured notes and deferred
issuance costs associated with the repayment of the line of credit. The
Company has determined excluding these items from the Non-GAAP measures
facilitates comparisons to historical operating results and comparisons
to peers, many of which similarly exclude this item.

(4) Amortization. The Company excludes amortization of patents
and acquired intangible assets because it is non-cash in nature and
because the Company believes that the Non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding operational performance. In addition, excluding this item from
the Non-GAAP measures facilitates comparisons to historical operating
results and comparisons to peers, many of which similarly exclude this
item.

(5) Tax Expense/Benefit from Prior Years. The Company excludes
certain income tax-related items in respect of income tax audit
settlements and their related FIN 48 accrual reversals. The Company
believes that the Non-GAAP financial measures excluding this item
provide meaningful supplemental information regarding operational
performance. In addition, excluding this item from the Non-GAAP measures
facilitates comparisons to historical operating results.

(6) Gain on Sale of Investment. The Company excludes the gain on
sale of its strategic equity investment in Carbonite, Inc. The Company
believes that the Non-GAAP financial measures excluding this item
provide meaningful supplemental information regarding operational
performance. In addition, excluding this item from the Non-GAAP measures
facilitates comparisons to historical operating results.

(7) Gain on Sale of Businesses. The Company excludes the gain on
sale of its businesses of Cambridge BioMarketing LLC, Web24, and Tea
Leaves Health, LLC. The Company believes that the Non-GAAP financial
measures excluding this item provide meaningful supplemental information
regarding operational performance. In addition, excluding this item from
the Non-GAAP measures facilitates comparisons to historical operating
results.

(8) Tax Expense due to the Tax Cuts and Jobs Act. The Company
excludes certain income tax-related items in respect of the Tax Cuts and
Jobs Act, specifically, the non-current tax associated with the
repatriation of untaxed foreign earnings, the revaluation of deferred
tax liabilities and the revaluation for uncertain tax positions from
prior years. The Company believes that the Non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding operational performance. In addition, excluding this item from
the Non-GAAP measures facilitates comparisons to historical operating
results.

The Company presents Adjusted non-GAAP Cost of Revenues, Adjusted
non-GAAP Research, Development and Engineering, Adjusted non-GAAP Sales
and Marketing, Adjusted non-GAAP General and Administrative, Adjusted
non-GAAP Interest Expense, Adjusted non-GAAP Other Income, Adjusted
non-GAAP Income Tax Provision and Adjusted non-GAAP Net Income because
the Company believes that these provide useful information about our
operating results and enhance the overall understanding of past
financial performance and future prospects.

j2 GLOBAL, INC.NET INCOME TO ADJUSTED EBITDA
RECONCILIATIONTHREE MONTHS AND TWELVE MONTHS ENDED DECEMBER
31, 2017 AND 2016(UNAUDITED, IN THOUSANDS)

The following table sets forth a reconciliation of Adjusted EBITDA to
net income, the most directly comparable GAAP financial measure.

Three Months Ended December 31,

Twelve Months Ended December 31,

2017

2016

2017

2016

Net income

$

49,871

$

43,158

$

139,425

$

152,439

Plus:

Interest expense, net

16,372

10,400

67,777

41,370

Other income, net

(22,696

)

(438

)

(22,035

)

(10,243

)

Income tax expense

32,669

15,041

60,541

59,000

Depreciation and amortization

43,444

33,522

162,041

122,091

Reconciliation of GAAP to Adjusted non-GAAP financial measures:

Share-based compensation and the associated payroll tax expense

8,997

3,703

22,737

13,650

Acquisition-related integration costs

11,253

12,973

27,489

18,782

Indirect tax expense (benefit) from prior years

1,970

(1,900

)

4,977

(1,000

)

Adjusted EBITDA

$

141,880

$

116,459

$

462,952

$

396,089

Adjusted EBITDA as calculated above represents earnings before interest
and other expense, net, income tax expense, depreciation and
amortization and the items used to reconcile GAAP to Adjusted non-GAAP
financial measures, including (1) share-based compensation, (2) certain
acquisition-related integration costs, (3) additional indirect tax
expense from prior years and (4) certain gains on sale of businesses. We
disclose Adjusted EBITDA as a supplemental Non-GAAP financial
performance measure as we believe it is a useful metric by which to
compare the performance of our business from period to period. We
understand that measures similar to Adjusted EBITDA are broadly used by
analysts, rating agencies and investors in assessing our performance.
Accordingly, we believe that the presentation of Adjusted EBITDA
provides useful information to investors.

Adjusted EBITDA is not in accordance with, or an alternative to, net
income, and may be different from Non-GAAP measures used by other
companies. In addition, Adjusted EBITDA is not based on any
comprehensive set of accounting rules or principles. This Adjusted
non-GAAP measure has limitations in that it does not reflect all of the
amounts associated with the Company’s results of operations determined
in accordance with GAAP.

j2 GLOBAL, INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

Q1

Q2

Q3

Q4

YTD

2017

Net cash provided by operating activities

$

51,191

$

60,464

$

67,341

$

85,424

$

264,420

Less: Purchases of property and equipment

(9,660

)

(9,285

)

(10,538

)

(10,112

)

(39,595

)

Add: Contingent consideration*

20,000

19,950

—

—

39,950

Free cash flows

$

61,531

$

71,129

$

56,803

$

75,312

$

264,775

* Free cash flows of $61.5 million for Q1 2017 and $71.1 million for
Q2 2017 is before the effect of payments associated with certain
contingent consideration associated with recent acquisitions.

Q1

Q2

Q3

Q4

YTD

2016

Net cash provided by operating activities

$

64,524

$

67,528

$

60,488

$

89,847

$

282,387

Less: Purchases of property and equipment

(4,321

)

(4,865

)

(8,261

)

(7,299

)

(24,746

)

Add: Contingent consideration*

8,000

—

—

—

8,000

Add: Excess tax benefit share-based compensation

264

833

974

200

2,271

Free cash flows

$

68,467

$

63,496

$

53,201

$

82,748

$

267,912

* Free cash flows of $68.5 million for Q1 2016 is before the effect
of payments associated with certain contingent consideration
associated with recent acquisitions. Amounts reflected were adjusted
from previously disclosed periods in order to be comparable to the
current period.

The Company discloses Free Cash Flows as supplemental Non-GAAP financial
performance measure, as it believes it is a useful metric by which to
compare the performance of its business from period to period. The
Company also understands that this Non-GAAP measure is broadly used by
analysts, rating agencies and investors in assessing the Company’s
performance. Accordingly, the Company believes that the presentation of
this Non-GAAP financial measure provides useful information to investors.

Free Cash Flows is not in accordance with, or an alternative to, Cash
Flows from Operating Activities, and may be different from Non-GAAP
measures with similar or even identical names used by other companies.
In addition, the Non-GAAP measure is not based on any comprehensive set
of accounting rules or principles. This Non-GAAP measure has limitations
in that it does not reflect all of the amounts associated with the
Company’s results of operations determined in accordance with GAAP.